Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 3, 1991 TAG: 9102010408
SECTION: BUSINESS PAGE: D-1 EDITION: METRO
SOURCE: DANIEL HOWES/ BUSINESS WRITER
DATELINE: LENGTH: Long
Indeed, it may be at least a year before the beleaguered airline industry - typified most recently by the systemwide shutdown of 62-year-old Eastern - is able to look seriously at third-tier markets such as Western Virginia. U.S. airlines lost about $2 billion last year and face more tough times in 1991.
The irony is that some of those same, apparently slow, markets may hold the greatest promise for profitable air service. Consider:
Roanoke Regional Airport was Virginia's third-busiest airport in 1989, when considered apart from the two Northern Virginia terminals serving metropolitan Washington. More than 710,000 passengers passed through the Roanoke airport, compared with 1.7 million in Richmond and 1.3 million in Norfolk.
Roanoke's 16-month-old terminal, built with federal, state and local financing, is being operated by a bilateral commission that appears less interested in parochial politics and more attuned to professional management and marketing.
Eastern's brief operation in Roanoke created some competition among carriers and dampened fares. It's departure allows remaining airlines to increase fares.
Business and political leaders desperate for economic development often link those opportunities with improved air service, spurring continual marketing of the region to major carriers.
Such would-be projects as the Hotel Roanoke's redevelopment, a downtown convention center, even the reinvented Explore, promise to draw additional travelers to the Roanoke Valley. Many of them will want to arrive by air.
The oft-repeated joke - "Nice airport, too bad no one flies there" - is off base, officials, analysts and airline executives insist. They point out that seven carriers serving Roanoke Regional provide 49 daily flights to 12 cities, including non-stop runs to four of the top five destinations for travelers from here.
Even in an economy that makes airlines cautious about expansion, Georgia-based Atlantic Southeast Airlines Inc., operating as The Delta Connection, likely will add an eighth round trip between Roanoke and its hub at Atlanta's Hartsfield International Airport.
"We're more apt to add frequency than we are to increase aircraft size," said Rob Gustafson, ASA's regional sales manager. "Most folks would rather have more flights than one jet a day," a basic operating tenet for commuter airlines.
Airport officials and travel agents agree. More frequent flights give travelers more opportunities to make more connections - often the difference between sleeping at home or in a faraway hotel.
That only one carrier - USAir - now flies full-size jets into Roanoke is more a problem of perception than actual quality of transportation. "The community is better off with more frequent flights than it is with one or two big jets," said Mike Waters, manager of planning and promotion at the state Department of Aviation.
Air Wisconsin, operating as a United Express carrier, also plans to add service, a fifth flight this summer to Washington Dulles International Airport, where travelers can connect with flights for cities around the world. Some runs to Dulles currently include stops in Richmond, which officials hope to eliminate in favor of faster, direct service.
Consider, too, the carrier's service to Chicago. Stops in Charleston, W.Va., were jettisoned and now the airline - using 100-seat jets - is considering a fourth non-stop, daily flight to O'Hare International Airport, United's busiest hub.
"There are a lot of cities that would like to have [the] kind of service" that Roanoke has, said Jack Mason, vice president of marketing for the Appleton, Wis.-based airline.
A spokeswoman for Comair, the Cincinnati-based commuter carrier with ties to Delta Air Lines, said there is a "real possibility" a sixth daily run between Roanoke and Delta's Ohio hub will be started this year. And by 1993, the 19-seat Metroliner commuters - the cigar-shaped plane disliked by so many passengers - will be replaced with larger aircraft.
The size of aircraft has been a common complaint of travelers to and from such "commuter" cities as Roanoke. Small planes are perceived by some to be less safe and less comfortable than full-size jets. Carriers recognize those concerns, said Jacqueline Shuck, the Roanoke Regional Airport's executive director, and she foresees a trend away from the tiny commuter planes toward small, fuel-efficient jets.
Comair, ASA and USAir commuter lines, such as Jamestown, N.Y.-based Chautauqua Airlines, accompany discussion of their service to the Roanoke Valley with assurances that larger planes - such as 30-seat Saab 340s - soon will be flying their routes to Roanoke.
Shuck admits the airport has an image problem and thinks it's incorrectly linked to the small planes. "I think there really is a perception in the area that we have second-class service, but really, for the area, we have very good service," Shuck said.
Eastern's flights between Roanoke and Atlanta claimed no more than 9 percent of the local air market during the carrier's four-month stint here and coaxed few travelers off ASA's direct runs to Atlanta and USAir's connections through Charlotte, officials said.
But Eastern's presence spurred competition among the airlines locally. The ailing carrier did reduce fares temporarily, even as skyrocketing oil prices drove many carriers to post record fourth-quarter losses.
Someone heading to Atlanta for, say, two business days will see an increase of nearly $100 round-trip over the Eastern-influenced fares of last fall and early winter, according Gene Swartz, owner of Travelmasters Inc. By flying only to a major hub already served by carriers in Roanoke, the now-defunct carrier appears to have done little to tip the competitive balance.
With war being waged halfway around the world and oil prices still volatile, air carriers are girding for a turbulent 1991. USAir, for example, posted a $454 million loss on $6.6 billion in revenues last year, and announced that it plans a major restructuring of its route system to stanch some of the hemorrhaging.
What those changes might mean for Roanoke's major carrier still is unclear. Last month the Arlington-based airline said it would eliminate 97 of its 289 flights in California, 20 departures at Cleveland and another 25 departures at the company's hub at Baltimore-Washington International Airport.
"We're looking at a pretty substantial restructuring of our route network," spokesman Dave Shipley said.
Asked about the impact of those plans on Roanoke, Shipley said: "We're looking to reduce the capacity that we fly by 4 or 5 percent. Roanoke is an important spoke in our hub-and-spoke system."
USAir has 14 weekday daily jet departures from Roanoke. Another 13 daily departures of commuter planes carry passengers to hubs in Pittsburgh and Dayton, Ohio, as well as to Richmond and Washington National Airport. The carrier's weekend schedule is slightly smaller.
The airline operates 55 percent of the flights here each day and it appears committed to Roanoke. Still, profitablity matters.
"The real key to the airlines is you don't ask for the moon," Shuck said. "You have to be reasonable. They're not in the business for charity."
A prime example is service to New York. While that city remains the leading destination for travelers from Roanoke, USAir could not profitably maintain early-morning, non-stop service to LaGuardia Airport, several officials said.
Then there's Nashville American Eagle, which feeds Roanoke passengers to the American Airlines hub at Raleigh-Durham International Airport. It flies three daily round trips on its "starter aircraft," the 19-seat Jetstream.
"Right now, we're happy with the number of flights and the aircraft," said Ed Martelle, a spokesman for American Eagle in Fort Worth. In the next year, "you're not going to see much movement from us in Roanoke. If we start getting a huge clamor to travel to or through Raleigh-Durham from Roanoke, we might have to look at that again."
American Eagle planners had intended to open 40 new markets this year, but American Airlines' decision to leave 11 markets prompted the subsidiary to pick up those routes as well. Effective Thursday, American trimmed its schedule 11 percent, or by about 250 flights, including 21 departures from its Nashville hub and 16 from Raleigh-Durham.
Still, Martelle said, American Airlines is set to take delivery later this year of 75 Fokker F-100s, whose comparatively economic fuel consumption enable carriers to penetrate smaller markets such as Roanoke. But even if the giant carrier decided to include Roanoke in some future route restructuring, there's no guarantee it would stay.
"If it's not economically justifiable or supported, three or six months later the airline will take the jets out and put the commuters back in," said Mark Daugherty, an airline analyst with Dean Witter Reynolds Inc. in New York.
Thus, Shuck's conclusion that Roanoke and similar cities need to be reasonable in their requests for increased airline service, while promoting evidence of market improvements. Burgeoning census figures - the population of the region from Lexington to Pulaski jumped 6.5 percent from 467,545 in 1980 to 498,076 in 1990 - might grab a major carrier's attention. Or promising local business developments, such as a renovated Hotel Roanoke conference center, might garner more interest.
Roanoke's location in Western Virginia, several hours' drive from other major airports, virtually ensures jet service from at least one major carrier, officials said, maybe more.
Yet that same location, ringed with USAir hubs in Charlotte and Baltimore, American Airlines hubs in Nashville and Raleigh-Durham and a United hub at Dulles, all but guarantees that the Star City will never itself become a hub.
Moreover, the Roanoke airport is hemmed in by Interstate 581, mountains, a cemetery and commercial developments that would make expansion difficult, if not impossible.
But upgrading - well, that's another story.
Airports in Roanoke, Lynchburg, Charlottesville and Newport News are recent beneficiaries of a state program intended to help localities upgrade their terminals and air fields, in part to spur economic development.
More than $6 million in state aid, drawn from the Commonwealth Airport Fund, helped build Roanoke's new $10 million terminal, part of a $25 million upgrading of the field. From the same fund, Charlottesville received $6 million for its $9.4 million terminal and Lynchburg garnered $2.8 million for its new $4.3 million facility.
Within the past few years, a new airport terminal was built in Richmond, expansions were begun in Newport News and Norfolk, and long-term projects were undertaken at Dulles and National airports in Northern Virginia.
The terminals are opening as the airline industry finds itself retrenching, restructuring and dumping routes that prove unprofitable. Still, state officials say they have heard scant criticism of the outlays, culled from fuel taxes, highway user and licensing fees.
If anything, "the criticism was that we didn't do it soon enough," said Steve Musselwhite, a Roanoke Valley insurance executive who sits on the state Transportation Board.
"Unfortunately, they [the new terminals] happen to be coming on line when the economy is turning down and we are seeing cutbacks in [air] service," state Secretary of Transportation John Milliken said. "I think they were prudent investments. You have to look at them as long-term investments. They have a 20-, 30-, 40-year usable life."
A renovated Hotel Roanoke and new conference center would sharpen demand more complete air service. Local officials hoped USAir, which already provides discounted fares to Roanoke for travelers headed to conferences at Virginia Tech, might be persuaded to augment its service. Or, a second major carrier might then enter the market.
Said Musselwhite: "All of us would like to see four or five more airlines coming in there . . . but we have to be realistic. Until we get more people we have won't get more airlines in here."
by CNB